Anne desperately wants to resolve her claim that Tom plundered their closely held corporation. She thought that the arbitration hearing would start next week. But the arbitrator is too busy (that’s what Anne’s lawyer reported to her) and, to make matters worse, Anne has begun to question whether the arbitrator has the expertise to decide her claim.
Anne’s lawyer is not concerned. He has lots of other work to do, and therefore, the threatened postponement comes as a relief to him. What is more, Anne’s complaint � that the arbitrator does not have sufficient subject-matter expertise � simply does not fly with him. How could it? The lawyer specifically agreed with the other side that this arbitrator would decide the case.
However, Anne’s lawyer did turn red when Anne asked him how he chose the arbitrator. He turned beet red when Anne asked the following:
“Did you hear anything about the proposed arbitrator through word of mouth?” (Anne’s lawyer sheepishly admitted that he did not ask anyone about the proposed arbitrator.)
“Did you make your arbitrator selection decision based on the proposed arbitrator’s experience in arbitrating other cases?” (Anne’s lawyer, after some beating around the bush, said that he did not know how many other cases the arbitrator has arbitrated.)
“Did you find out whether the proposed arbitrator has subject matter expertise?” (Anne’s lawyer’s response: “What am I supposed to do? Do a background check on a proposed arbitrator?”)
Anne found it odd that lawyers spend lots of well-deserved time and energy in connection with the voir dire of potential jurors, but that “lawyers � the very same lawyers! � do not ‘voir dire’ proposed arbitrators.”
Her lawyer’s derisive response: “Voir dire an arbitrator? Come on, Anne, that’s ridiculous.”
THE LIST SYSTEM
Private companies that administer arbitration proceedings generally appoint arbitrators through a list system. The company’s administrator provides each party with a list of potential arbitrators, together with biographical information for each potential arbitrator.
Each side then has a specified period to strike unacceptable arbitrators and to list the remaining proposed arbitrators in order of preference. The administrator then selects the arbitrator from the remaining names on the list in the designated order of mutual preference. If the parties do not select an arbitrator under this process, the administrator will unilaterally designate the arbitrator.
If a private company does not conduct the arbitration, the parties themselves must select the arbitrator. Accordingly, the arbitration agreement must identify the specific arbitrator or set forth an arbitrator selection process.
In some instances, the parties may be able to agree on the person who will serve as the arbitrator, and that person will consent to the selection. Then, there will be no need to establish an arbitrator selection process. Rather, the agreement simply will state that “[name of arbitrator] shall act as the arbitrator.”
Often, however, the parties will be unable to agree on the arbitrator, or the person selected will decline or be unable to act as the arbitrator. If the parties have a pre-dispute arbitration agreement, moreover, it may not be practical to identify a particular arbitrator. The actual dispute may not arise until many months or years after the parties enter into the agreement. At that time, the selected person may not be available to serve as arbitrator.
A POOL AND A DEADLINE
Getting sidetracked on the arbitrator selection process will delay the arbitration and the resolution of the underlying dispute. It also will increase the costs of the proceeding. For these reasons, the parties should try to adopt an easily workable arbitrator selection process. To speed up the process, they also could agree that the selection of the arbitrator will take place within a specified number of days after the arbitration begins.
The selection process will take place more quickly if the parties can agree on a pool of potential arbitrators or on the desired background and expertise of each potential arbitrator. The parties therefore may find it helpful initially to narrow the field by setting forth (a) the names of potential arbitrators or (b) the desired characteristics of potential candidates, including desired professional experience, training and educational background.
TIME AND MONEY
To save money and time, Anne chose to resolve her claims of corporate-plundering in arbitration rather than in the courtroom. But Anne has been frustrated by her attorney’s laid-back attitude to the arbitrator-selection process.
Anne was more shocked when her attorney admitted that he had not bothered to find out whether the arbitrator had any experience in closely held corporations or any understanding of financial statements � or whether he had the time to schedule the arbitration hearings as soon as the parties were ready. (Anne did not have the courage to ask: “Didn’t you tell me that you were going to use an accountant to explain how the corporation was plundered? How do we know that the arbitrator will understand this expert testimony?”)
Anne’s attorney properly understood that uncovering a potential conflict of interest is a necessary part of picking an arbitrator. However, he forgot to recognize that a party should do more than merely confirm that the potential arbitrator does not have a conflict.
To begin with, a party and his or her lawyer should do what Anne and her attorney neglected to do � initially determine the type of arbitrator best suited to hear the case. They should consider whether the arbitrator should be a lawyer, a certified public accountant, an architect, an engineer, an appraiser or other professional, and whether he or she has training, knowledge or experience in the factual or legal issues in dispute.
They also should want to know whether the arbitrator has experience and training in arbitration or other types of alternative dispute resolution. An expert who knows everything about the subject matter in dispute could be a terrific choice, but only if the expert also is able to handle an arbitration proceeding in an efficient and expeditious way.
The parties further should decide whether the professional must:
� have been actively practicing his or her profession for a minimum number of years;
� have practiced his or her profession in a particular jurisdiction or area; and
� be on the board or panel of a specified professional or other organization.
The lawyer in the courtroom staring at potential jurors often has only limited information about the potential jurors, and very little time to do something with it. The lawyer also has the ability, in many courtrooms, to pose questions directly to the potential jurors.
A lawyer in an arbitration proceeding will rarely get the chance to talk directly to any proposed arbitrator.
However, the lawyer often will have the ability � through the Internet, through word of mouth or through professional publications, and so on � to uncover all kinds of information about proposed arbitrators. Lawyers should take full advantage of this potential information so that they are better able to make an educated guess about the ability of the potential arbitrator to adjudicate the dispute.
The best selection process and the most thorough background checking will mean little if the chosen arbitrator later becomes unable to serve because of other professional commitments, illness or death. Accordingly, the parties should think about three final issues in connection with the proposed arbitrator.
First, particularly in an arbitration proceeding that will take several months, the parties should consider whether to specify a procedure if the arbitrator becomes unable to serve after the arbitration has started. The parties should agree on not only the process to select a replacement arbitrator but also whether any or all of the arbitration proceedings will have to be repeated before the replacement arbitrator.
Second, to ensure that the arbitration proceeding does not languish, the parties should determine, before appointment of the arbitrator, whether the proposed arbitrator has the time to hear and adjudicate the dispute in the time frame that the parties want. To ensure that the selected arbitrator will promptly decide the dispute, the parties further may agree to select an arbitrator only if he or she expressly represents that he or she has the time to hear and decide the matter by a specified date.
Third, to ensure the fairness of the arbitration proceeding, the parties should avoid ex parte communications with any proposed arbitrators. Where a private company is not conducting the arbitration, this means that the parties must consider how they initially will contact proposed arbitrators.
For instance, the parties could agree that any proposed arbitrator shall be contacted “jointly by the attorneys for the parties, in writing, and neither party shall engage in any ex parte communication with any proposed arbitrators.” The agreement further could provide that “each and every arbitrator shall be subject to disqualification if any party engages in any ex parte communication with the arbitrator before or during the pendency of the arbitration.”
Unlike a jury trial, “arbitrator voir dire” does not take place face-to-face. But that does not mean that a lawyer should follow Anne’s lawyer’s lead, wash his or her hands of the process, and simply pick a name from a list. To the contrary, lawyers should conduct their own informal voir dire by taking advantage of all available information to best ensure that the chosen arbitrator can fairly, expeditiously and knowledgeably adjudicate the dispute.
If Anne’s attorney had followed this advice, Anne might be feeling less anxious about her upcoming arbitration hearings.
The author is a member at Eckert Seamans of Philadelphia and is co-chairman of the Philadelphia Bar Association’s ADR Committee.
